June’s aircraft report: The ATR 72-600

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The ATR 72-600 received European Aviation Safety Agency (EASA) certification on 31st May 2011 and first delivery to Royal Air Maroc, which has an order for four aircraft of the type, is scheduled for next month.

The -600 series features new avionics developed in partnership with Thales: a new glass cockpit with five liquid crystal display screens, new communication, navigation, monitoring, flight management automatic pilot and alert management systems, and a new MPC computer system (including aircraft maintenance and protection functions).

It also features a new cabin, designed by Giugiaro, with new, even more comfortable seats which are also lighter-weight, and completely redesigned baggage stows offering 30% more roller bags stowage.

"The development of the new 600-series ATRs is based on our commitment to continue developing our line of aircraft in order to better meet the needs of regional airlines, in terms of operating costs as well as airworthiness and passenger comfort," says ATR's CEO Filippo Bagnato.

Like ATR 72-500s manufactured since early 2008, the ATR 72-600 is powered by PW 127M engines with maximum power 2,750 horse power per engine at take-off. Maximum range with full passenger load is 899 nautical miles (1,665 kilometres).

Market

Since launching the -600 series programme in October 2007, ATR has received orders for a total of 170 aircraft. The manufacturer has sold five ATR 42-600s and 165 ATR 72-600s.

At the Paris air show where it announced 60 turboprop orders, 54 aircraft sales were for the ATR 72-600 model. Azul Linhas Aéreas ordered 10 ATR 72-600s while leasing companies placed orders for 50 aircraft of the type. GECAS ordered 15 ATR 72-600s and 15 options while Nordic Aviation Capital signed an order for 10 ATR 72-600s and 10 options. ATR also announced 19 ATR 72-600s and 12 options from two undisclosed orders. Earlier this year lessor Avation placed orders for four ATR 72-500s and four ATR 72-600s for application with Virgin Australia via a wetlease contract from Skywest Airlines.

"The various orders from the lessor community, such as Air Lease, Nordic Aviation Capital, and GECAS also show the potential demand for the aircraft on operating leases, which bodes well for the type amongst investors and owners alike," comments Collateral Verification's VP Commercial Aviation Services Gueric Dechavanne.

In 2010, ATR booked orders for 39 aircraft of the type and 20 options: Azul Linhas Aéreas ordered 20 ATR 72-600s, Air Lease Corp. ordered 10 ATR 72-600s while Caribbean Airlines place orders for nine aircraft. Since 2007, ATR has also booked orders from ATR 72-500 operators such as Air Nostrum, Air Caraibes, Air Tahiti and Kingfisher Airlines, while the ATR 72-600 has also recorded orders from the Italian Navy (four ATR 72-600s) and the Turkish Navy (nine ATR 72-600s).

"Demand for the ATR 72-600 has been very strong over the last 12 months due to its attractive operating economics, proven reliability of the family of products, and latest avionics suite upgrade over the ATR 72-500. We expect this aircraft will do very well and should also bring the bulk of the orders going forward as operators realize the benefit of the latest improvements to the aircraft, such as the glass cockpit," says Dechavanne.

ATR delivered 51 aircraft in 2010 and is keeping production this year "in the area" of 50-53 aircraft. However the number of -600 deliveries for 2011 remains unclear but by the end of this year, four customers RAM, Air Lease, Azul Linhas Aéreas and Caribbean Airlines, will receive their brand new aircraft. Air Lease has entered into lease agreements with TRIP Linhas Aereas for a total of six new ATR 72-600s.

ATR still plans to raise production next year to 70 aircraft, and possibly further in 2013-14 if the airframer is confident that the supply chain can cope.

Bagnato says the economy is improving again and capacity is growing. "Fleet utilisation is improving and there is a trend that new aircraft are pushing old generation aircraft out," he comments. According to him, emerging markets will fuel the global growth in the future while developed region's growth will remain below historical growth.

In its 20-year forecast, ATR anticipates a demand for 3,000 turboprops with a sale volume in excess of $20 billion. Bagnato says 40% will be for replacement fleet while the remaining 60% will be growth. The manufacturer is convinced that 30% of the demand for 3,000 turboprops over the next 20 years would be met by a larger aircraft. "Of the 3,000 turboprop market over the next 20 years, I anticipate that 900 to 1,000 aircraft will be larger size turboprops," Bagnato comments.

Values and Lease Rates

Lease rates for a new ATR 72-500 delivery are expected to be in the $170,000 to $185,000 a month bracket depending on the airline's credit and terms of the lease.

AVITAS believes that the market for the ATR 72-500 is fairly firm. Senior director - valuation and consulting Michael Miller notes the aircraft has fairly good operator diversity with the average number of units per operator at about five, although the top five operators represent 27% of the fleet. As of May, only three ATR 72-500s were being advertised as available for sale or lease, according to him. "In general, availability for the type has generally been consistently low as a result of its strong operating economics for regional airlines across a range of environments worldwide," he comments.

A 2011-delivery has a current market value of $18.11 million, according to AVITAS while lease rates are in the $163,000 to $188,000 a month bracket. At present, AVITAS values the ATR 72-600 at $500,000 more than a 2011 -500 aircraft. "This should command $5,000 to $7,000 more per month on a lease basis," says Miller.

List prices between the ATR 72-500 and ATR 72-600 models are around $1.3 million, according to latest campaigns.

Jonathan McDonald of IBA Group says the list price variance is not necessarily the best way to benchmark market value differentiation as some list prices will vary depending on options fitted to the aircraft.

Despite the lack of "true" transaction data, IBA Group would value a brand new ATR 72-500 passenger aircraft at $18.42 million. "Our lease rate range for the same aircraft, brand new - would be somewhere in the $170,000 - $185,000 area - essentially as near as a 1% lease rate factor," says McDonald.

McDonald explains that the PW127M engine on the -600 doesn't add any value as it can be fitted to -500 model and there's an Airworthiness Directives to bring the PW127Fs up to -M engine model.

"When it comes to the cabin upgrades in the -600, much of the value enhancement is perceived by the end user - in terms of aesthetics, enhanced comfort and ambience. The avionics and systems upgrades must add value in terms of enhanced reliability and service life longitude of the new avionics," he adds.

According to him, it can cost $1 million to upgrade a partial EFIS flight deck to full liquid crystal display EFIS Flight Deck. But McDonald points out that this cost halves once all the bugbears are ironed out.

A brand new passenger configured ATR 72-600 would have a current market value of $19.17 million, representing a $750,000 premium over the -500. "Our lease rate factor for the aircraft would still be around that 1% area, thence the lease rate would be in the region of $175,000-$192,000 a month," adds McDonald.

According to Dechavanne lease rates for the ATR 72-600 are $195,000 a month while the current market value of a new delivery is $19.25 million.

"With the price of oil continuing to remain high and many developing countries growing their current infrastructure to support the growth in air travel, Collateral Verifications sees this trend continuing which has and will provide further stability and improvements to the current values and lease rates," says Dechavanne.